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FIRST DIVISION

[G.R. No. 128525. December 17, 1999]

MA. DIVINA ORTAEZ-ENDERES, for herself and as the Judicially


Appointed Special Administratrix of the Philinterlife Shares of Stocks of
DR. JUVENCIO P. ORTAEZ, JOSE N. ORTAEZ, ROMEO JOVEN N.
ORTAEZ, ENRICO N. ORTAEZ, CESAR N. ORTAEZ and LIGAYA S.
NOVICIO, petitioners, vs. THE HONORABLE COURT OF APPEALS,
SECURITIES AND EXCHANGE COMMISSION, JOSE C. LEE,
CARLOS LEE, ANGEL ONG, CARMENCITA Y. TAN, BENJAMIN C.
LEE, MA. PAZ C. LEE and ALMA AGGABAO, respondents.

DECISION
YNARES-SANTIAGO, J.:

This is a petition for review on certiorari with prayer for temporary restraining order and
writ of preliminary injunction of the decision of the Court of Appeals dated May 31, 1996 which
affirmed the rulings of the Securities and Exchange Commission (SEC for brevity) En Banc and
the SEC Hearing Officer. The assailed decision of the Court of Appeals as well as that of the
SEC En Banc and SEC Hearing Officer denied the prayer of petitioner for the issuance of a writ
of preliminary injunction to restrain private respondents from exercising their rights as
stockholders on record of Philippines International Life Insurance Co., Inc. (Philinterlife, for
brevity).
This case stems from a complaint filed on November 7, 1994 by petitioners before the
Securities and Exchange Commission, docketed as SEC Case No. 11-94-4909, [1] for the
annulment of transfer of shares of stocks to private respondents, annulment of sale of corporate
properties authorized by private respondents who compose the management of the corporation,
annulment of subscriptions on increased capital stocks, accounting and inspection of corporate
books and records, and damages. Petitioners also prayed for the issuance of a writ of preliminary
injunction and temporary restraining order against private respondents to enjoin them from
exercising their rights as stockholders of Philinterlife on the ground that their shares of stock
were acquired through illegal and fraudulent schemes.
Petitioners alleged that Philinterlife is a registered corporation founded in 1954 by the late
Dr. Juvencio Ortaez; that at the time of his death in 1980, Dr. Ortaez owned at least fifty-one
percent (51%) of the capital stock of the company; that special proceedings were pending with
the Regional Trial Court of Quezon City, Branch 85, for the settlement of the intestate estate of
the deceased Dr. Ortaez, where Rafael S. Ortaez and Jose S. Ortaez were jointly appointed as
special administrators. Petitioners further stated that after the death of Dr. Ortaez and without the
prior authorization of the intestate court, one-half (1/2) of the shares of stock of Dr. Ortaez were
transferred in the names of private respondents through the manipulations, devices and
machinations of the latter; that the shares of stocks of private respondents lawfully belonged to
the estate of Dr. Ortaez and hence, they are not entitled to enjoy and exercise their rights and
privileges as stockholders of the company. Petitioners also contended that respondent Jose C.
Lee misrepresented himself as president of Philinterlife and sold the parcel of land owned by the
corporation located in Manila to Citiriser Development Corporation without the indispensable
requisites prescribed by the Corporation Code; that private respondents obtained additional
subscriptions without consideration by way of unlawful corporate machinations; and that private
respondents had been conveying and disbursing corporate properties and funds as well as
preventing petitioners from inspecting the corporate books and records.
In their answer,[2] private respondents stated that the subject matter of the complaint is not
within the jurisdiction of the SEC but with the Regional Trial Court; that petitioners Ligaya
Novicio and children represented themselves to be the common law wife and illegitimate
children of the late Dr. Ortaez; that on March 4, 1982, the surviving spouse Juliana Ortaez, on
her behalf and for her minor son Antonio, executed a Memorandum of Agreement with her other
sons Rafael and Jose, both surnamed Ortaez, dividing the estate of the deceased composed of his
one-half (1/2) share in the conjugal properties; that in the said Memorandum of Agreement, Jose
S. Ortaez acquired as his share of the estate the 1,329 shares of stock in Philinterlife; that on
March 4, 1982, Juliana and Rafael assigned their respective shares of stock in Philinterlife to
Jose; that contrary to the contentions of petitioners, private respondents Jose Lee, Carlos Lee,
Benjamin Lee and Alma Aggabao became stockholders of Philinterlife on March 23, 1983 when
Jose S. Ortaez, the principal stockholder at that time, executed a deed of sale of his shares of
stock to the private respondents; and that the right of petitioners to question the Memorandum of
Agreement and the acquisition of shares of stock of private respondents is barred by
prescription. Private respondents also alleged that they did not violate the provisions of the
Corporation Code in the sale and disposition to Citiriser Development Corporation of the parcel
of land and improvements owned by Philinterlife in Soler Street, Sta. Cruz, Manila; that this is
evidenced by the Board Resolution dated June 15, 1987 which approved the authority of the
corporations president, Jose C. Lee, to sign in behalf of the company all documents pertaining to
the sale; that private respondents did not commit any violation of law when Philinterlife
increased its capital stock from Five Million to Ten Million Pesos in 1984 as this increase was
based on a resolution passed by the stockholders owning more than two-thirds of the outstanding
capital stock during the stockholders meeting held on March 21, 1984 and thru said resolution,
the unsubscribed capital stock of the corporation in the amount of P1.250 Million was offered for
subscription; that said increase was likewise approved by the majority of the board of directors
of the corporation; that records of all the business operations of Philinterlife have always been
open and available for examination and inspection not only by petitioners but by all other
stockholders as well.
On December 7, 1994, SEC Hearing Officer Alberto Atas issued a temporary restraining
order.[3] Hearings were thereafter held to determine the propriety of issuing the writ of
preliminary injunction, wherein both parties presented their respective documentary and
testimonial evidence.
On February 10, 1995, SEC Hearing Officer Atas issued an Order [4] denying petitioners
application for the issuance of a writ of preliminary injunction on the ground that petitioners
failed to make a valid cause to entitle them to the relief applied for, and the pretended rights of
the petitioners are still contentious, unsettled and of doubtful character.
Not satisfied with the Order, petitioners elevated the same to the Securities and Exchange
Commission En Banc.
On March 24, 1995, the SEC En Banc issued a resolution [5] dismissing the petition and
stating in part:

After a careful perusal of the arguments raised in the petition and answer as well as
the evidence submitted during the hearing, we find that the Hearing Officer did not
commit grave abuse of discretion in denying petitioners application for a writ of
preliminary injunction.

One of the pieces of evidence submitted is the stock and transfer book of Philinterlife
which showed that private respondents are owners of Philinterlife shares. Hence, as
stockholders of Philinterlife, they are entitled to exercise all the rights and privileges
pertaining thereto.

With respect to the alleged extrajudicial partition of the shares of stocks owned by the
late Dr. Juvencio Ortaez, we rule that the matter properly belongs to the jurisdiction of
the regular court where the intestate proceedings are currently pending.

x x x. The complainants right or title moreover must be clear and unquestioned for
equity, as a rule, will not take cognizance of suits to establish title and will not lend its
preventive aid by injunction where the complainants title or right is doubtful or
disputed. The possibility of irreparable damage, without proof of violation of an actual
existing right, is no ground for an injunction, being mere damnum absque injuria.[6]

Aggrieved by the resolution of the SEC En Banc, petitioners filed a special civil action
for certiorari with the Court of Appeals, docketed as CA-GR SP No. 36923, seeking to annul the
aforesaid resolution and the issuance of a temporary restraining order and/or writ of preliminary
injunction against private respondents. Petitioners alleged that the SEC gravely abused its
discretion in issuing the resolution because (1) the stock and transfer book of the company was
not adduced throughout the proceedings and, (2) there is no valid and lawful basis for private
respondents claim that they are the stockholders of Philinterlife.
On May 31, 1996, the Court of Appeals rendered a decision [7] dismissing the petition on the
ground that the denial by the SEC of petitioners application for a writ of preliminary injunction
was proper and valid. Petitioners Motion for Reconsideration was denied in a Resolution dated
March 11, 1997.[8]
Hence, this petition was filed stating that the Court of Appeals erred in (1) not holding that
the ownership of the shares of stocks of Philinterlife is still an issue to be resolved by the SEC,
hence, private respondents have not yet been declared as stockholders thereof, and (2) not
finding that the private respondents claim as stockholders of Philinterlife has no legal and/or
factual support.
The sole issue to be resolved in the case at bar is whether the Court of Appeals erred in
upholding the SEC when it ruled that petitioners had not established clear existing legal rights to
entitle them to a writ of injunction to enjoin private respondents from exercising their rights as
stockholders on record of Philinterlife.
With regard to the assigned errors which are interrelated, petitioners contend that private
respondents cannot rely on the deeds of assignment of shares of stock in their favor because the
same are void, no evidence being adduced to show that the transfer taxes were paid. Petitioners
further allege that private respondents cannot exercise the rights and privileges of stockholders of
Philinterlife because there was no valid disposition or transfer to the latter of the shares of stock
belonging to the estate of the late Dr. Juvencio Ortaez. Petitioners also claim to possess legal
personality to bring this suit on the ground that they are stockholders of the corporation and that
co-petitioner Ma. Divina Ortaez-Enderes is the Special Administratrix of the estate of the late Dr.
Juvencio Ortaez with regard to Philinterlife shares.
We cannot sustain petitioners stand.
Injunction may issue pendente lite only in cases of extreme urgency, where the right to the
possession, during the pendency of the main case, of the property involved is very clear; where
considerations of relative inconvenience bear strongly in favor of the complainant seeking the
possession of the property pendente lite; where there was willful and unlawful invasion on
plaintiffs right, over his protest and remonstrance, the injury being a continuing one.[9]
Before an injunction can be issued, it is essential that the following requisites be present: (1)
there must be a right in esse or the existence of a right to be protected; and (2) the act against
which injunction is to be directed is a violation of such right.[10]
We agree with the findings of the SEC as affirmed by the Court of Appeals that petitioners
failed not only to establish a threatened violation of a right but they also failed to discharge the
burden of clearly showing the right to be protected. [11] On the mere contention that the
shareholdings of private respondents belong to the estate of the late Dr. Ortaez which is still the
subject of settlement before the Regional Trial Court of Quezon City, petitioners had not
established their clear legal rights to obtain injunctive relief against private
respondents. Injunction, whether preliminary or final, is not designed to protect contingent or
future rights.[12]
Ma. Divina Ortaez-Enderes, who represents herself to be the Special Administratrix of the
Estate of Dr. Ortaez, is one of the petitioners in this case. Records show that neither the estate of
Dr. Ortaez nor the Special Administratrix Ma. Divina Enderes was a party in the main case
docketed as SEC Case No. 11-94-49099 before the Securities and Exchange Commission. In an
Omnibus Order dated March 6, 1996,[13] the SEC denied the Motion to Intervene filed by the
estate of Dr. Ortaez represented by the Special Administratrix on the ground that the estate is not
a stockholder of Philinterlife. When the case was elevated to the SEC En Banc and later to
respondent Court of Appeals, the estate of Dr. Ortaez was not included as petitioners. Not being a
party in the proceedings below, the Special Administratrix does not have any legal personality to
seek a review by this court of the decisions of the SEC and the Court of Appeals.[14]
In support of their position, petitioners cited in their reply the issuance of an Order by the
intestate court declaring that the shares of stock of Philinterlife belong to the estate. It is admitted
that the special proceedings are still pending before the court and the estate had not been
partitioned and distributed. Notwithstanding the proceedings being conducted by the intestate
court, the petitioners rights or interests over the estate or over the assailed shareholdings in the
name of private respondents are still future and unsettled rights which cannot be protected by the
writ of injunction. The rule is well settled that the jurisdiction of the regional trial court as a
probate or intestate court relates only to matters having to do with the settlement of the estate and
probate of will of deceased persons but does not extend to the determination of questions of
ownership that arise during the proceedings.[15] The intestate court may pass upon the title to a
certain property for the purpose of determining whether the same should or should not be
included in the inventory but such determination is not conclusive and is subject to final decision
in a separate action regarding ownership which may be constituted by the parties. [16] The court in
charge of the intestate proceedings cannot adjudicate or determine title to properties claimed to
be a part of the estate and which are equally claimed to belong to outside parties. [17] Therefore,
the possibility of irreparable damage without proof of violation of an actually existing right of
petitioners over the shareholdings presently in the possession of private respondents is no ground
for an injunction being a mere damnum absque injuria.[18]
Moreover, the grant or denial of an injunction rests in the sound discretion of the lower
court. The following findings of the Court of Appeals affirming those of the SEC are binding and
conclusive on this Court:

Applying the above jurisprudence in the instant case, this Court rules that the
respondent SEC En Banc did not abuse its discretion in denying petitioners
application for a writ of preliminary injunction.Petitioners failed to show a clear and
positive right to the questioned shares of the late Dr. Juvencio Ortaez in Philinterlife
from which respondents allegedly acquired their possible respective
shareholdings.Petitioners alleged right over the shares of stock in question as well as
other properties spring from their yet to be established position as heirs of the late Dr.
Juvencio Ortaez. Said issue of heirship has to be established in the probate court
particularly in the settlement of estate of the late Dr. Juvencio Ortaez. As it is now,
petitioner have mere expectance on the properties of the late Dr. Juvencio Ortaez. The
judicial protection of a writ of preliminary injunction does not cover contingent or
future right. An actual, clear, and positive right should exist before the mantle of the
powerful writ of injunction can protect its movant who prays for the preservation of
the status quo pending the hearing of the main case on the merits. Petitioners, having
only contingent and future right as alleged heirs of the late Dr. Juvencio Ortaez, are
not entitled to a writ of preliminary injunction. If respondents are dissipating the said
shares of stocks and properties of Philinterlife which allegedly form part of the estate
of the late Dr. Juvencio Ortaez, this issue could be properly brought to the attention of
the probate court, the Regional Trial Court of Quezon City, branch 85, in the estate
proceedings in Sp. Proc No. Q-30884.[19]
Contrary to the contentions of petitioners, the SEC found that private respondents are bona
fide owners of shares of stock in Philinterlife constituting the majority thereof or 94% of the
outstanding capital stock of the company. Records show that they have been stockholders of
Philinterlife since 1983 up to the present. It was only in 1994 that petitioners sought the
annulment of the shareholdings of private respondents before the SEC. The grant of the writ of
injunction against private respondents by restraining them from exercising their rights as
stockholders would in effect dispose of the main case without a trial. The SEC acted correctly in
denying the issuance of the writ until the merits of the case can be heard. Further, it is a basic
procedural postulate that a preliminary injunction is not proper where its purpose is to take the
property out of control or possession of one party and transfer the same to the hands of another
who did not have such control at the inception of the case [20] and whose title has not been clearly
established by law.[21]

WHEREFORE, the petition is DENIED. The decision of the Court of Appeals dated May
31, 1996 is AFFIRMED.
SO ORDERED.
Davide, Jr., C.J., Puno, Kapunan, and Pardo, JJ., concur.

[1]
Rollo, pp. 171-186.
[2]
CA Rollo, pp. 163-176.
[3]
CA Rollo, pp. 59-60.
[4]
Rollo, pp. 262-265.
[5]
CA Rollo, pp. 33-36.
[6]
CA Rollo, pp. 35-36.
[7]
Rollo, pp. 58-69.
[8]
Rollo, p. 71.
[9]
Merville Park Homeowners Association, Inc. v. Velez, 196 SCRA 189 (1991).
[10]
Cagayan de Oro City Landless v. Court of Appeals, 254 SCRA 220 (1996).
[11]
Sales v. SEC, 169 SCRA 109 (1989).
[12]
Ulang v. Court of Appeals, 225 SCRA 637 (1993).
[13]
Annex H of Comment.
[14]
Arcilla v. Court of Appeals, 215 SCRA 120 (1992).
[15]
Ramos v. Court of Appeals, 180 SCRA 635 (1989).
[16]
Reyes v. Mosqueda, 187 SCRA 661 (1990).
[17]
Ibid.
[18]
Heirs of Eugenia Roxas v. IAC, 173 SCRA 581 (1989).
[19]
Rollo, pp. 66-67.
[20]
Central Bank v. dela Cruz, 191 SCRA 346 (1990); Gaisano v. Hidalgo, 192 SCRA 224 (1990).
[21]
Navarro v. Court of Appeals, 205 SCRA 429 (1992).